ECB Must Avoid Hasty Moves Amid Inflation Risks: Stournaras

European Central Bank (ECB) Governing Council member Yannis Stournaras emphasized the need for caution in monetary policy decisions, citing upside inflation risks while avoiding hasty moves. In an interview with Bloomberg on the sidelines of the Eurogroup meeting in Dublin, Stournaras noted that the euro area economy faces persistent supply-side shocks alongside strong demand driven by fiscal expansion and rapid AI investment.

He expressed concern over the potential for second-round wage effects, although significant effects have yet to materialize. However, Stournaras left the door open for an October rate hike if September data show a fresh inflation surge or sharp energy cost spikes pushing the economy toward the ECB's adverse scenario.

Stournaras also welcomed the US Federal Reserve's recent rate decision as positive for global monetary credibility, highlighting the central role of the Fed and the US dollar. He further emphasized the importance of fiscal prudence in addressing eurozone sovereign bond pressures, specifically the widening Franco-German spread.